THE WALL STREET JOURNAL©>l 989 Dow 1 ones & Company, Inc. A fl Rights Reserved

TUESDAY, SEPTEMBER 5, 1989

Winning Cotntnodity Traders
May Be Made, Not Born
YOUR
MONEY
MATTERSA Turtle Race Worth Watching
Performance of 14 commodity-trading advisers taught by Richa rd Dennis
AVERAGEANNUALCOMPOUND
RETURNFIRST HALF

Stig Ostgaard

124.1%

Elizabeth Cheval

114.1

41.1

51.6 to 178.0-2 7.1 to 203.3

Michael Cavallo
Chesapeake2

107.7

16.1

33.6 to 307.4-54.7 to 195.5

94.4

6.4

45.7 to 147.7-13.1 to 160.1

Paul Rabar89.1

20.0

78.1 to 125.9-24.8 to 189.6

Philip Lu

88.9

36.0

36.3 to 132.3-9.2 to 148.2

Craig Soderquist

82 .4

21.3

58.9 to 135.9-20.0 to 132.2

B Y STANLEY W. A NGRISTCan the skills of successful commodity
trading be learned? Or are they innate, some
sort of sixth sense a lucky few are born with?
Richard Dennis, the legendary Chicago commodity trader, who turned a grubstake of$400 into
an estimated $200 million or so in 18 years,bas no doubt. Following
an experiment with agroup of would-betraders recruited fromaround the country, he'sconvinced the secrets ofcommodity trading canbe learned.
Over the past 4 1,2years, a group of 14
commodity traders be
Richard Dennis
taught earned an average annual compolllld rate of return of 80%. 1ncontrast, about 70% of all non-professional commodity traders lose money on a yearly basis.
"Trading was even more teachable than I
imagined," be says. "ln a strange sort of way,
it was almost bumbling."
Mr. Dennis says be bad debated the learning
vs. innate-ability question with some of his
associates for years. While they argued that hisskills are "ineffable, mystical, subjective orintuitive," be says, bis own answer was far simpler. The 40-year-old Mr. Dennis attributes his
success to several trading methods he developed and, perhaps more important, the discipline to follow those methods.
To prove his point, Mr. Dennis decided torun a real-life experiment. In late 1983 andagain in 1984, be placed ads in The Wall Street
Journal, Barron's and the New York Times
seeking people who wanted to be trained astraders. The job required that they move to
Chicago, where they would receive a smallsalary and a percentage of any profits while Mr.

1989

ANNUAL
RETURNSQUARTERLYRETURNS

RETURN(Range: 85-88) 1(Range 85-89) 1

0.4%

87 .8 to 296.7%

49.0 to 317.5%

James DiMaria

70.9

0.8

17.3 to 154.9-20.2 to 192.3

Brian Proctor

64.5

-13.2

-20.1 to 151.9-41.6 to 155.8

Howard Seidler

64.2

23.0

63 .7

18.8

15.8 to 123.6-29 .1 to 195.1-16.6 toTom Shanks
Jeff Gordon

41 .8

16.4

Michael Carr

38.9

13.7

3.2 to 111.1-18.1 to88.0

90.3-37 .8 to 183.1-5 .6 to83.9-3 1.7 to 112.4

By Comparison

Barclay CTA lndex 3
S&P 500

25.10%

10.90%

4.3 to 55.4%-12.10% to 32.4%

19.20%

16.50%

5. 10% to 31.6%-22.50% to 21.3 %1) Returns overstate performance because traders paid small or no commissions and no management fees through firstquarter of 1988. However, they received no interest credit on trading capital.
2) Chesapeake Capital Corp. is jointly owned by R. Jerry Parker and Russell J. Sands.
3) The performance of more than 110 commodity-tradi ng advisers who have been trading more than four years4) Total return, including dividends -Source Barclay Trading Group Ltd.

Dennis taught them bis methods.
About 1000 applicants answered each ad.
He selected 80 people to come to Chicago forinterviews. From these, he chose 13 for the program in 1984 and 10 in 1985. During the fouryears of the program three people were dropped.
Oflhe remaining 20, 16 are known to be trading
public funds, three are believed to be trading forthemselves, and one bas gone into another field.
The students were called the "turtles". (Mr.
Dennis, who says he bad just returned from
Asia when he started the program, explains that
he described it to someone by saying, ''We aregoing Lo grow traders just like they grow turtles
in Singapore.")Mr. Dennis provided classroom training for
two weeks, teaching the fundamentals of commodity trading and the principles behind his

methods of trading. In general, Mr. Dennis is
known as a trend-following trader, that is, one
who determines that a market is moving up ordown and then takes an appropriate position toprofit from that movement. When classroom
work ended he gave each student $1 million incapital Lo trade.
In choosing participants for the program, Mr.
Dennis says be was biased toward people withmathematical and game-playing aptitudes ... .
Russell Sands, 34, another turtle, recently
formed a partnership with Mr. Parker to tradecommodities for others. He told Mr. Dennis
that the riskiest thing be ever did was quit a job
on Wall Street to move to Las Vegas to playbackgammon and blackjack professionally.
He won a world championship in backgammon in 1980.